Japan Wants to Join Talks on US-led Trade Pact: PM Noda

By IBT Staff Reporter On 11/11/11 AT 9:28 AM

Japan's Prime Minister Yoshihiko Noda attends a news conference at his official residence in Tokyo September 30, 2011. Photo: REUTERS

Prime Minister Yoshihiko Noda on Friday declared Japan's readiness to join talks on a U.S.-led free trade pact that could radically transform the nation's economy and challenge its political status quo.

Noda is due to fly on Saturday to Hawaii for a meeting of Asia-Pacific leaders where he will inform other nations involved

talks on the pact -- called the Trans-Pacific Partnership, or TPP, -- of Japan's decision.

He had been expected to make an announcement on Thursday but delayed it to buy more time for discussions with opponents of the pact within his own party.

I'm determined to preserve Japan's medical system of which it can be proud, its traditional culture and beautiful farming villages, Noda told a news conference At the same time, as a trading country that has built its prosperity of today, we must take advantage of growth in the Asia-Pacific region.

From this point of view, we will begin negotiations with countries concerned.

For Noda, who became Japan's sixth premier in five years two months ago, the pact is a first big test whether he can make tough decisions without endangering party unity and alienating the opposition, whose help he needs in a split parliament.

TPP Membership would wrench open Japan's closeted farm sector to competition, give its exporters better access to dynamic Pacific Rim markets and challenge a political system over which the farm lobby has long held powerful influence.

Noda's plan faces challenges from the onset as U.S. lawmakers urged President Barack Obama's administration not to make a hasty decision to begin talks with Japan before making sure Tokyo is truly prepared to open its markets.

Japanese auto and electronics makers hold high hopes that joining the TPP, which would in principle eliminate all tariffs among member nations, would allow them to better compete with rival South Korea.

DEATH KNELL

Farm lobbies, on the other hand, see the TPP as a death knell for Japan's agriculture sector, which has been protected by high tariffs, and say joining the pact would hit especially hard those farmers who are still reeling from a triple whammy in March of a massive earthquake, tsunami and nuclear accident.

Many lawmakers within and outside the ruling Democratic Party oppose Japan's participation in the TPP talks.

Free trade is anathema to many Japanese farmers, who after decades of decline make up just 4 percent of the workforce and contribute only 1 percent of GDP, but pack political clout through a powerful lobby and an electoral system biased toward rural voters.

But the average age of farmers is 66, most of them toiling on tiny patches of land where they grow the world's costliest rice and other produce under protection of tariffs as high as 778 percent for rice and 252 percent for wheat.

In a bid to soothe farmers, Noda's government last month announced a plan to consolidate typically tiny patches of farmland into bigger farms capable of competing internationally.

Membership in the pact now discussed by nine nations -- Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States and Vietnam -- could have profound effects on the Japanese economy that would go beyond exports and agriculture.

TPP, billed as a 21st century pact because of its comprehensive nature, would also open the domestic market to foreign competition in such industries as financial and medical services.

Economists say Tokyo's commitment to the talks can also serve as a signal to investors that it is serious about reforms to an economy plagued by red-tape that keeps out newcomers, domestic and foreign.